They’re conservatives…They don’t need no freakin’ study!!! Seriously, is it just me or do others find that liberal organizations generally do a better job of actually documenting their claims?
An extensive google search revealed lots of uses of this claim in conservative circles, always attributed to either our friend Michael Tanner at Cato or to Thomas Sowell. They never bother to explain anything about the way they counted things…The most detailed explanation I got was here, http://www.iff-ifoundfreedom.com/freedom/wastevote.html
By the way, the comparison to United Way is likely deceiving, depending how it is done. United Way acts as a fundraiser for a variety of local charities and generally their overhead number includes only their overhead and not the additional overhead costs that the organizations they distribute the funds have.
Yes, december, I know who Thomas Sowell is. Actually read at least part of his “Markets and Minorities” book in economics class back in college. (You know, part of the liberal indoctrination one gets in college … And, kimstu and I went to an undeniably liberal college by the way.)
And, Sowell is indeed a fine economist… However he is also a fine partisan for the right wing and after reading a recent column he wrote on global warming, I was amazed to discover that he seems to have learned quite well how to twist truth to serve his ends. Kind of disappointing to me really. I may never have agreed with him very much but I did respect him as an intelligent academic.
Anyway, I don’t doubt that he is competent to do such a study. But someone still has to tell me at least a little how he did it or at least defined the terms.
Well, I felt I had to live up to jshore’s claim that liberals are better documenters than conservatives, so I actually went to the library and got out Michael Tanner’s book The End of Welfare (Washington, D.C.: Cato Institute, 1996). Turns out that the “30 percent gummint antipoverty overhead in 1965, 70 percent nowadays” soundbite does not originate with Thomas Sowell, who was probably just quoted as having quoted it from Tanner. Tanner attributes this “30% vs. 70%” claim to a 1990 “estimate” by Robert Woodson, based on figures from a 1986 publication by the Office of Policy Development, The National Public Assistance System.
Tanner points out in his footnote (p. 136):
Oh. You mean, back in 1965 before there were major medical care and housing assistance programs for the poor, most of the assistance money went to the poor directly, and now (or at least, in 1990 or 1986) a chunk of it goes instead to the salaries of their landlords, doctors, social workers, etc. Well, that does make a difference, doesn’t it?
Unfortunately, since Tanner doesn’t bother to repeat that caveat in his online article, and neither do any of the sources that borrow his soundbite, you might come away with the misleading impression that the high percentage of federal antipoverty money not going directly to poor people is solely due to governmental bureaucratic inefficiency. Glad I was able to clear that up for you.
(1) The 10-15% figure for overhead does indeed seem to include only United Way’s overhead and not any other overhead and administrative costs borne by the organizations it passes the money on to.
(2) The Better Business Bureau Wise Giving Alliance standards call for a charity to spend “No more than half (50 percent) of its total income on administrative and fund raising costs”.
The National Charities Information Bureau recommends 60% and says that 70% or higher “is a sign of a well-managed charity”.
(3) “The report notes that there’s no universal formula for calculating overhead costs for charities. Nor is there generally accepted standards for what level of overhead is acceptable.”
So, where are we now? Your 20 cents on the dollar spent by the government has now gone up to 30 cents…that’s before welfare reform was enacted and quoting figures that are available without explanation from a few conservative pundits / economists who we might assume did not do the calculation in a way that would put the government in the most favorable possible light (to put it mildly).
Whereas, your 90 cents on the dollar spent by charities has become 50-60% if it a decent one and 70% if it is a particularly well-managed one, using what are admittedly non-standardized practices for accounting for overhead vs. program costs.
In other words, much of your dramatic difference between government and private charity seems to have vanished under closer scrutiny.
To be totally fair, I should probably say 50-60%+ and 70%+ since these were given as lower bounds for what one should consider a decent or a well-managed charity.
So, I guess if doctors don’t provide the poor with health care for free and landlords get reimbursed directly for subsidized housing (instead of the money going directly to the poor person who then pays the landlord) then this gets counted as not being in the 30% that goes to the poor. Good to know!
According to the NCIB, a 30% overhead/fundraising rate is not unusual for even a “well-managed” private charitable organization; the Better Business Bureau considers a rate of up to 50% acceptable.
The statistic that only 30% of federal antipoverty money goes directly to poor people (besides being at least twelve years old) does not imply an administrative overhead of 70%. That 70% includes money paid for services to the poor (to landlords, Medicaid doctors, etc.) which doesn’t pass through the poor person’s hands.
So the true difference between government and private antipoverty efforts, in terms of waste and inefficiency, is apparently quite a bit smaller than ElJeffe was trying to make out.
I repeat, this is not to deny the existence of government waste and inefficiency, or to say that private charities can’t do somewhat better. But it should cast a lot of doubt on the simplistic idea that private charities will do everything the government does—and do it far, far cheaper—if we can just get the government out of the way.
Just to round out the point, does anyone really believe that is taxes were abolished and replaced by voluntary charitable contributions, people would give just as much (minus the differences in overhead)? No way. They’d give some, but keep more. It’s just human nature. One of the things the government can do is guarentee that programs will be adequately funded. And by making everyone pay according to their means, it ensures that the amount each individual must pay can be kept to a minimum.
Hey, if you really want to abolish anti-poverty programs, public schools, social security and medicare, fine with me. I’m not poor, I’m not old, and I have no kids. I could take some great vacations with all that extra dough. Whoopee! Amsterdam here I come!
Well for the advocates of social welfare here’s my two second soundbite…
Chumpsky wrote:
Do you mind paying single mothers with 2 children $500 a month? Or do you mind subsidizing housing so that the poor can afford housing?
You damn right I mind paying $500 a month as a matter of fact If I had all the money I paid last year in federal income taxes alone I could have hired that same single mother to bring her children to my house and clean the damn place and…eeeekkkk…EARN my fucking money just like I did. Imagine that having to actually support yourself.
Not that I really give two hoots in hell what the commie pinko’s like chumsky or kimstu or jshore think about my opionion anyway but I have lived well below the poverty level gone to bed hungry woke up the same and went to classes anyway. I have worked my ass off all my life, defended yours and never asked for a single handout. Never got a student loan, pale grant etc etc etc, and only recently have I begun to actually make what would be considered a good income (in at least some parts of the country). I could go into a long diatribe of the events and attitudes I have seen that has convinced me that social welfare programs are evil, but alas I can’t provide the proverbial online CITE. By the way corporate welfare is just as insidious.
Slight hijack:
The thought of the new terriorism insurance bill that passed the house is the biggest bunch of bullshit I have ever heard and I think I’ll go chew on some nails now and write my senator now. GRRRRRRR.
:smack:
P.S. I don’t preview or spell check so forgive in advance.
Thanks very much for all the legwork you did. In conclusion, it appears that the correct figures are about 60 cents on the dollar for private charities, 30 cents for government-funded programs. So private charities are only twice as efficient. Still, a big difference.
Further, I don’t think the fact that a lot of that welfare money goes to the non-poor in some way exonorates the government - that’s precisely the problem. When the government takes it on itself to pay for something, the funding inevitably, on a long enough timeline, finds itself going to all manner of things that it was never intended to pay for. Which is why I think we should be very careful whenever we decide to let the government begin to throw money at some problem - their aim is notoriously bad.
sqweels:
Hard to say. Keep in mind, though, several things:
As has already been noted, government welfare is half as efficient as private charities. Therefore, we need only half the money to equal the benefit of these social programs.
As has also been noted, people give more when they have more. Thus, if they weren’t shelling out money in taxes, they would give more.
As you note, people would also keep some of this extra money - and they would likely spend or invest it. This would boost the economy, which would help everyone, further reducing the need for charity.
People also tend to help out in non-monetary ways. Letting a friend stay with you when he’s down on his luck, buying lunch for a homeless person, these sorts of things are difficult to quantify, but their contribution can’t be ignored. People don’t often sit around and do nothing if their friends and relatives are homeless and starving, if they can help it.
One thing I am sure of - there’s not a chance in hell that we’ll ever find out whether we could get by without government welfare programs or not.
Jeff
Did you actually read the links Jeff? The upshot is 60 cents on the dollar for private, and the same 60 cents on the dollar for Government if you account for the money in the same way.
The 30 cent figure you quoted is arrived by some fancy accounting that effectively ignores half of the money that benefits the person being helped.
Re the questions raised in the OP, I think it’s a mistake to use the terms “Republican” and “conservative” interchangably, and it’s a mistake to use the terms “liberal” and “Democrat” interchangably.
I agree that the traditional left-right spectrum is inadequate, but if I decide to think in those terms anyway, here’s how I picture things: We have a long line; everyone’s on it somewhere. Everyone to the left of the center of the line is a liberal; everyone to the right of the center of the line is a conservative. The Republicans occupy a portion of the line from the midpoint to about 25% of the way toward the right end. The Democrats occupy a portion of the line from the midpoint to about 25% of the way to the left end. Both parties tend to talk and act as though they really represent most of what they think of as their half of the spectrum. The (untrue) assumption/implication is that people to the right of the Repubs, or to the left of the Dems, are are part of small, “lunatic fringe” minorities.
I think that years ago, the Repubs occupied more of the right half of the spectrum, and the Dems occupied more of the left half. But (unfortunately, IMHO), both parties came up with the strategy of moving toward the middle. Both figured that they could “capture the middle” (and possibly poach a little over the line) wihtout loosing any of the people they were, in their shift, leaving behind. After all, where were those people going to go? There are only two parties that count. The Dems know that everyone on the left half of the spectum will always see them as being less bad, and the Repubs know that eveyone on the right half will always see them as being less bad.
Geez, Hazel, what’s with talking about the original OP…We’ve got bigger fish to fry! [“Oh…You thought this plane was going to Alabama…No, no, Albania!”]
No problem…but as Tejota has pointed out, the conclusion we can draw is that this is the difference when Tanner at CATO (or the person who did the original study) does some rather bizarre accounting tricks to make the government part look as inefficient as possible. What the real comparison is, I’m not sure. You would have to study both government and private charities using the same sort of accounting measures. [I don’t think we can necessarily conclude that it’s about the same either…I think we just have to say we don’t have good enough data.]
This almost makes Reagonomics look good. You seem to be double-counting monies left and right to arrive at the conclusion that the poor would be helped just as much without the antipoverty programs. Also, you don’t account for the fact that the extra money that some people get from lower taxes would be offset by less money going to the poor…and even government bureaucrats, etc., who after all, spend money too. It is not at all clear that the money back in the hands of the wealthy would provide more of a boost to the economy than in the hands of the poor or the bureaucracy. [The only thing that is clear is that the wealthy would be better off.]
Been there…Done that. Read a good history book. What, do you think that these government antipoverty programs came around just because some bureaucrat couldn’t think of something more fun to do? There are a good historical reasons why Western democracies have evolved from a more laissez-faire to less laissez-faire capitalist society over the years.
Actually, the upshot is 60+ cents on the dollar for private, and no really reliable number for government, I suppose.
I double-counted nothing. I mentioned higher efficiency for private charities over government, then mentioned that people donate more when they have more money, then mentioned the contributions to the eocnomy that would be gained from money being invested rather than being wasted inefficiently by the government. And I’m well aware that there would be less money going to poor people from the government if we eliminated or cut back on programs designed to give money to poor people. Further, not only the wealthy would get money back. Last I checked, the middle and lower classes paid taxes, too. In fact, a large portion of the taxes that the poor pay go towards these welfare programs. You know, payroll taxes?
I don’t think you can really look at the state of the nation 100 years ago, before the creation of our massive welfare state, look at the nation now, and say that we’re better off, thus government handouts are good. Also, the two periods - before and after welfare - are divided by a huge depression and big freakin’ war. Not exactly reliable data.
FDR created the modern welfare state because he didn’t know what else to do, and thought the (remarkably successful) strategy of waiting out the depression was for sissies. It was a side-effect of Keynesian blathering about how the natural state of the economy was a depression, bloated government is good, blah blah blah.
Unless you can point to an example that clearly shows someplace where things sucked, a welfare state was initiated, no other significant events occured, and suddenly things were hunky-dory, I don’t think the history books have much to offer us.
Well, “double-counting” was probably the wrong word. But, my points are:
(1) We haven’t really established anything about the relative efficiency of government and private charity.
(2) Since people give only a small portion of their money to charity, it seems hard to imagine that the increase in charitable giving that you would get for each dollar in tax cuts would be anything but a very small fraction of that dollar. I mean, some of us did give our tax rebate last year to charities / advocacy groups but I believe we were a pretty small minority.
(3) To show an investment gain, you have to show a higher multiplier effect for the money being spent by those who get the tax breaks than by it being spent in the way that it was being spent. There may be such a higher multiplier effect but it is by no means clear, particularly since poor people spend more of their income and thus money going to them tends to have a higher multiplier effect. [Note that tax cuts are only unambiguously stimulative when a government undertakes them by just borrowing more rather than cutting spending. (Even then, some economists argue that excessive borrowing can raise interest rates and crowd out other investment, although I doubt many would argue that is a serious danger at the moment.)]
True enough. However, note that Pres. Bush hasn’t tried to cut payroll taxes…He has tried to cut income taxes and estate taxes, i.e., taxes that are most progressive and thus are paid in large proportion by the well-off. And, as we’ve seen, since the burgeoning inequality has meant that the lion’s share of the income realized…and of the income tax paid…goes to a smaller and smaller fraction near the top, this will necessarily result in most of the cuts going to the wealthiest taxpayers…which is indeed what studies of the distributional impact of these cuts show.
Well, you and I both know that we cannot do controlled experiments like this in a real society. Other events always happen. However, the point is that laissez-faire capitalism has seemed to always be associated with huge inequality and there always seems to be poor people falling through the cracks and charity does not seem to have been enough to prevent this in the past. Are things different now? I know of no evidence to suggest that.
… And, kimstu and I went to an undeniably liberal college by the way.)